Deadline for 2017 Retirement Plan Contributions

If you’re like most people, you probably made a New Year’s resolution earlier this year. And if you’re like most of those same individuals, there’s also a strong possibility that you moved on from that resolution weeks ago.

That’s okay! There’s no rule that limits resolutions solely to the month of January. You can commit to learning a new skill, ending a bad habit, or making a positive change in your life any time of the year.

And if you’re regretting not taking full advantage of retirement account contributions during 2017, that’s okay too! Last year may be a distant memory, but you can still make certain retirement account contributions for 2017! That’s because current tax laws allow you to make contributions to last year’s retirement accounts up until the due date for filing your tax return.

With that in mind, let’s check out which accounts still allow you to make contributions for last year and why you’d want to take advantage of the opportunity.

Why Take Advantage?

Before we take a look at the actual accounts still that allow contributions for last year, let’s talk about why this is something you definitely want to take advantage of.

In general, tax-advantaged retirement account space is use it or lose it. That’s why it’s imperative that investors take advantage of any tax-protected space they can every year. There aren’t any catch-up provisions that allow you to go back in time and make contributions for calendar years when you contributed less than the maximum amount. Once the door closes on that calendar year, you’ll never get another chance to make those tax-advantaged contributions.

The retirement accounts listed below are examples of a few rare opportunities where investors get a little extra time to make those contributions before the opportunity disappears forever!

What Contributions Can I Still Make?

Here are the retirement accounts where you still have time to make contributions for 2017.

Traditional and Roth IRA

You can make contributions to a Traditional or Roth IRA for a year at any time during the year or by the due of your return for that year. Keep in mind, you don’t get extra time to make 2017 contributions by filing for an extension. Simply put, you have until April 17, 2018 to make contributions for 2017.

The same deadline applies if you’re making Backdoor Roth IRA contributions for 2017.

Essentially, Backdoor Roth IRA contributions technically aren’t a thing. They’re more like contributions to a Traditional IRA that you’ll eventually convert to a Roth IRA. The important thing is that you make contributions to your Traditional IRA before the due date. When you convert your Traditional IRA to a Roth IRA is nowhere near as important as when you make your contributions.

Essentially, Backdoor Roth IRA contributions technically aren’t a thing. They’re more like contributions to a Traditional IRA that you’ll eventually convert to a Roth IRA. The important thing is that you make contributions to your Traditional IRA before the due date. When you convert your Traditional IRA to a Roth IRA is nowhere near as important as when you make your contributions.

The bottom line is that you have 30 days left to make IRA contributions for 2017. So, get started now!

Note: I know there are readers out there who have made maxing out their 2018 retirement accounts a top priority for this year. That’s a great goal, but don’t let that stop you from maxing out your 2017 space first! Focus on contributing whatever you can over the next month to your 2017 accounts, because after April 17 you won’t ever be able to contribute to 2017 accounts again. And on the bright side, you still have over a year to work toward maxing out your 2018 contributions!

Anyway, the question is: Is there still time to make HSA contributions for 2017?

The answer is yes!

Like an IRA, HSA contributions are due by your tax filing deadline. In fact, this is the case even if you didn’t even have an HSA during 2017. As long as you’re eligible you can open a new HSA account today and begin making contributions for 2017.

Unfortunately, there are a few limitations you should be aware of. But hang in there, it’s worth the effort to figure out how much you’re allowed to contribute. Here are a few of the more common scenarios that can limit your HSA contributions.

Employer Contributions. The amount you can contribute to your HSA is reduced by the amount of any employer contributions.

Last-Month Rule. If you were eligible on the first day of the last month of your tax year (i.e., December 1, 2017), you are considered an eligible individual for all of 2017. In other words, you are treated as though you had the same HDHP coverage for the entire year as you had on the first day of the last month. In that case, you can make the full 2017 contribution so long as you remain under an HDHP plan for 2018.

Partial Eligibility. If you weren’t eligible for the entire year and the last-month rule doesn’t apply, then you can only make contributions for 2017 for the months you were an eligible individual (e.g., if you had HDHP coverage for February through April of last year).

Solo 401(k)s

Solo 401(k)s are great accounts for anyone who has a side hustle or is self-employed (i.e., “1099 income”). If you have income from self-employment, I highly recommend you research the best solo 401(k) options and open an account ASAP. Here’s why…

A Solo 401(k) works much the same way as your employer’s 401(k) plan does. For both accounts, you can contribute money as an employee. But unlike your employer’s 401(k) plan, your Solo 401(k) also allows you to make an employer contribution! (That’s because you are both the boss and the employee at your side gig.)

Now, let’s take a closer look at the timing requirements for those contributions. In general, employee contributions must be made during the same calendar year. However, you have until your tax filing deadline (plus extensions) to make employer contributions.

There’s one small catch though – the deadline to set up your 401(k) is December 31. So if you haven’t established a Solo 401(k) for 2017, it’s too late. But that’s all the more reason to open an account now so you can take advantage of tax savings for 2018!

Contributions Due During the Same Calendar Year

Unfortunately, there are some accounts where you must make the contributions by the end of the calendar year. If you didn’t make contributions before the end of the calendar year – well, you’re out of luck.

Generally speaking, your employer will deduct a designated dollar amount from your paycheck and deposit it into your employer-sponsored retirement account (e.g., 401(k), 457(b) or 403(b)). That means you won’t be able to wait for your employee to deposit your paycheck into your personal checking account and cut a check to your 401(k) plan provider. Instead, you need to make those contributions during the payroll calendar year.

A Few Final Thoughts

Even though 2017 has come and gone, but you don’t have to live with regrets about not taking full advantage of tax-advantaged space in your retirement accounts. There’s still have one more month to maximize last year’s retirement accounts. What steps are you taking to max out your accounts?

WHAT'S YOUR PLAN FOR FINANCIAL FREEDOM?

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